The goal of this proposal is to learn how extracellular signaling molecules direct the formation of specialized cell types during embryonic development. The role of bone morphogenetic proteins (BMPs) in early liver development will be studied using a mouse tissue explant culture assay to determine how uncommitted cells in the endoderm are directed to become liver cells. The role of BMP in the specification of other endoderm organ cell types, including pancreas and thyroid, will be studied to determine if this signaling molecule is dedicated to liver development or plays a general role in endoderm organ formation. Signal transduction components of the BMP pathway and the fibroblast growth factors (FGFs) pathway, another signal that promotes liver development, will be monitored to determine if one of these signals permits a target cell to process the other signal. The role of transcription factors that are activated by BMPs will be examined to learn how they cooperate with endoderm factors to carry out BMP-dependent gene regulation. This project is designed to provide a multifaceted view of how a precursor endoderm cell processes an extracellular BMP signal and is committed to a liver fate. Knowledge of natural cell differentiation will promote the goal of manipulating cell differentiation for medical purposes.